It is possible to transfer your defined benefit (DB) pension. Your exact options depend on whether you’re still paying in.
If you are still saving into your pension, then you can transfer your DB pension to
If you are approaching retirement and are ready to access your benefits, your options are limited to either:
You can choose to transfer all of your benefits or just any Additional Voluntary Contributions (AVCs), as long as it’s in line with the rules for your specific pension section. Please see our read as you need guide here for more details.
Transferring your pension does, however, carry significant risks. You should carefully compare the benefits of your current pension with any alternatives before making a decision.
At face value, transferring from a DB scheme to a DC scheme may give you a broader choice regarding how, and when, to take your pension benefits.
In a DB scheme you can typically retire once you reach your Normal Retirement Age (NRA), which is usually between 60 and 65 years old, or from age 55 if you opt for Early Retirement. You can then:
In a DC scheme you set a Target Retirement Age (TRA), usually above 55 years old (or 50 if you have a Protected Pension Age). You can then:
This broader range of options for DC schemes was introduced as part of the Government’s pension freedoms in 2015. Not all of these options are available with the RPS and would need to be facilitated by another provider if available as part of a transfer.
Unlike a DB pension, the amount you receive from a DC scheme depends almost entirely on the performance of the funds your PRA is invested in.
This means if you transfer from a DB scheme to a DC scheme, you:
For these reasons, the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) both believe that it will be in most people’s best interests not to transfer their DB pension. You can read more about when a transfer may or may not be suitable on the FCA’s website here.
Transferring your pension is a big decision and one that would benefit from independent financial advice.
You might have to do this by law if the value of your DB benefits is more than £30,000 and you are looking to transfer to a Defined Contribution/Personal Pension Arrangement.
But it could still be beneficial to obtain advice even if you pot is worth less than that.
The same applies if you have a DC pension pot (which contains a guarantee of the benefit you may get – known as safeguarded benefits).
Liverpool Victoria (LV) has been chosen as the official partner to give RPS members access to financial advice. LV can be contacted on 0800 023 4187.
You are still free to choose your own Independent Financial Adviser (IFA). You can find an IFA in your area at unbiased.co.uk.
Pension transfers are one of the main routes being used by pension scammers.
Their tactics include:
If you fall prey to these fraudsters, you could lose your entire pension savings and be asked to pay a large tax bill too.
We recommend that you read and consider all available guidance before proceeding with a pension transfer.
If you are considering transferring your pension then you may benefit from financial advice. You might also have to do this by law if the value of your DB benefits is more than £30,000 and you are looking to transfer to a Defined Contribution/Personal Pension Arrangement.
If you do decide to transfer out of your DB pension scheme, then the process will be as follows:
Also in this section